InStorage Real Estate Investment Trust
TSX VENTURE : IS.UN

InStorage Real Estate Investment Trust

January 25, 2007 14:33 ET

InStorage REIT Announces TSX Venture Exchange Approval of Its Recently Announced Self-Storage Investments

TORONTO, ONTARIO--(Marketwire - Jan. 25, 2007) -

Attention Business Editors:

InStorage Real Estate Investment Trust (the "REIT") (TSX VENTURE:IS.UN) announced today that the TSX Venture Exchange has granted approval of its investments in the Stor edge portfolio of 10 self-storage properties (the "Properties") located in Western Canada, which investments were previously announced on December 11, 2006 and are scheduled to close on February 15, 2007.

The REIT will acquire the three Properties that are operating on a stabilized basis (the "Stabilized Properties") for an aggregate purchase price of approximately $20.8 million. Two of the Stabilized Properties are located in Calgary, Alberta, at 11807 - 40th Street SE and 4687 Barlow Trail SE, respectively. The third Stabilized Property is located in Okotoks, Alberta, at 241201 Range Road 34. Collectively the Stabilized Properties account for approximately 180,000 square feet of self-storage space and approximately 1,300 storage units. The purchase price for the acquisition of the Stabilized Properties by the REIT will be satisfied with approximately $6.2 million in cash and approximately $14.6 million in first mortgage financing.

The Stabilized Properties will be acquired pursuant to the acquisition agreement (the "Acquisition Agreement") between the REIT's subsidiary, InStorage Limited Partnership ("InStorage LP"), and various entities comprising the Stor edge Self Storage group of companies (the "Vendor"). Under the Acquisition Agreement, InStorage LP initially agreed to purchase the Properties from the Vendor for an aggregate purchase price of $44.4 million (subject to customary adjustments). In a separate assumption agreement between InStorage LP and InScotia Developments LP ("InScotia Developments"), InScotia Developments has agreed to assume the obligation of InStorage LP under the Acquisition Agreement to pay the purchase price with respect to remaining seven non-stabilized Stor edge properties (the "Development Properties") and, in effect, will purchase the Development Properties directly from the Vendor for an aggregate purchase price of approximately $23.1 million (subject to customary adjustments).

In connection with InScotia Developments' acquisition of the Development Properties, the REIT has agreed to fund InScotia Developments at closing with mezzanine loan financing in the principal amount of $13.8 million (the "Mezzanine Loan"). InScotia Developments will use the proceeds of the Mezzanine Loan, together with other financing, to acquire the Development Properties. The Mezzanine Loan will be made pursuant to the terms of an amended and restated development agreement (the "Development Agreement") between InStorage LP and InScotia Developments and (i) will bear interest at the rate of 9.0% per annum; (ii) will be open to pre-payment and otherwise repayable on the earlier of (a) the sale of the relevant property, (b) two years after the subject property achieves average occupancy over three consecutive months of at least 85%, also referred to as "stabilization", and (c) the fifth anniversary of the initial advance of funds under the Mezzanine Loan; and (iii) will be secured by a second mortgage, a second general assignment of rights and a second general security agreement.

In addition, pursuant to the terms of the Development Agreement, InStorage LP will have a first right and a first option to purchase each of the Development Properties from InScotia Developments. The first option to purchase in respect of each Development Property will be exercisable by InStorage LP not earlier than the first anniversary of the date of stabilization of the property and not later than the maturity date of the Mezzanine Loan provided by InStorage LP in connection with the property. Under the Development Agreement, the purchase price for any Development Property on the exercise of a first right or first option to purchase by InStorage LP is to be based on 95% of such property's appraised fair market value.

InScotia Developments is a limited partnership formed under the laws of Manitoba for the purpose of investing in and developing self-storage facilities. The Chief Executive Officer, President and Chief Operating Officer, and Chief Financial Officer of the REIT also comprise the senior executive officers and directors of the general partner of InScotia Developments, Carttera (InScotia) GP Inc. Moreover, the limited partners of InScotia Developments are also holders of trust units of the REIT, provided that, to the knowledge of the REIT, no single limited partner of InScotia Developments holds more than 12% of the issued and outstanding units of the REIT.

InStorage Real Estate Investment Trust

The REIT is an unincorporated open-ended real estate investment trust that invests primarily in self-storage properties and ancillary businesses throughout Canada. The REIT indirectly owns and/or operates 20 self-storage properties located in Ontario and Alberta.

Additional information concerning the REIT may be obtained on the REIT's website, www.instoragereit.ca, and on the SEDAR website at www.sedar.com, under the REIT's profile.

Forward-Looking Information

This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Examples of such statements include the intention to complete the investments mentioned above, as disclosed or at all, and the related rights and obligations of the parties to the transactions. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability and desire of the REIT, its subsidiaries and InScotia Developments LP to obtain necessary financing and satisfy conditions under applicable transaction agreements; the ability and desire of the parties to the transactions to comply with the terms of the transaction agreements, at closing and in the future; the level of activity in the underlying self-storage business of the REIT, the self-storage industry and in the economy generally; consumer interest in the services and products of the REIT's subsidiaries; competition; and anticipated and unanticipated costs. While the REIT anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this press release. Although the REIT has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT. Additional factors are noted under "Risks and Uncertainties" in the Management's Discussion and Analysis of the REIT for the quarter and year to date period ended September 30, 2006, a copy of which may be obtained on the SEDAR website at www.sedar.com.

Contact Information

  • InStorage Real Estate Investment Trust
    T. James Tadeson
    Chief Executive Officer
    (416) 867-9705
    Website: www.instoragereit.ca